Lecture 4 - Econ 102-Lecture 4 2/5/08 8 principles of...

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Econ 102-Lecture 4 2/5/08 8 principles of Economic Thinking 1. The use of scarce resources to produce a good is always costly 2. Individuals behave rationally and economize 3. Incentive matters Q.D= Quantity demand. Q.S = Quantity supplied. The price peo- ples income, are all factors that effect your choice. 4. Marginal changes. Small changes. Do we buy one more of the product, do we buy a third. 5. Information is scarce, and we have to make decisions without all the information. 6. Economic events: Primary and secondary effects. 7. Value of goods/services are subjective. Economists don t judge, and everyone is subjective on what they purchase. The just just look at the quantity, and price. House locations Preference Options: Urban Rural Ocean front Desert 8. The test of an economic theory is its ability to predict and explain events in the real world. Economic Theory ˚ X => ˚ Y. Cause and Effect. Causation: • (+) X ( ) => Y ( ) (-) X ( ) => Y( ) Magnitude: ˚ X => ˚ Y Lag Time: ˚ X ======> ˚ Y
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This note was uploaded on 04/15/2008 for the course ECON 102 taught by Professor Drozd during the Spring '08 term at Wisconsin.

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Lecture 4 - Econ 102-Lecture 4 2/5/08 8 principles of...

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